Using Porters’ Five Forces theory, analyse the competitive environment of a business of your choice.

University: Business Studies

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Sainsbury’s was founded in 1889. The owners of Sainsbury’s opened their first dairy shop in London. The dairy farm was a success as a business because of its low prices, the popularity of this shop lead to several other shops being opened in different locations around London. Between the period 1890 to 1900 the number of Sainsbury branches increased from 16 to 48. Sainsbury is one of the lead trading stores in Britain. The corporation employs 153,000 people 68% of these are part time and 32% are full time. 30,000 products are sold, 50% of these are Sainsbury’s own brand.

Sainsbury's serves over 14 million customers a week and at the end of the Financial year 26 March 2005 had 727 stores throughout the UK. Nearly 60% of their stores are in centre or edge-of-centre locations, many of these built on previously redundant sites.

The food retail market is very competitve. The firms which dominate the market are the large firms which trade nationally. There are few firms which trade nationally the ones that do trade nationally are Tesco, Sainsbury, Asda and Safeway. These companies have tremondus purchase power and due to this they reign sumpreme on the market.

The UK grocery market was valued at an estimated £103.4bn in 2001. The core business of supermarkets is food sales and expenditure on food in the UK has been growing every year for over a decade. In order to analyse the competitive environment of Sainsbury’s I will use Porter five force theory model as it is the most significant model to analyse a businesses environment.
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